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Author Topic: The New china.  (Read 344 times)

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Online Texan77

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The New china.
« on: July 30, 2021, 10:36:20 AM »
China is remaking itself in response to it coming population collapse. This is a huge change in direction of where the Chinese government is going with the country. It is expressing a new policy where young families are first. Young Chinese are often not even wanting to get married and are opting for zero children. The Chinese people are complaining that they can not afford a family in todays China. Housing it too expensive, health care is too expensive, Education is too expensive, It takes too much time to raise one child and it is impossible to afford. The 9-9-6 work week makes it impossible for be a good parent. In response to the problem China is going in a completely new direction. Of course these changes will take a years to come about but it will like be faster than anything possible in the west.  China just has a Censes which they held up the results for months. It is thought that is was much worse than even the Chinese thought. There is the belief that China advertises having 1.4 billion people may only really have 1.2 billion people.  The would make India the worlds most populist country.  China population is set to half by 2170 to 2200. China is fighting back in a way that may not even be possible in Germany or other western countries. This video is boring so if you need entertainment do not bother.


Online Steveboy

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Re: The New china.
« Reply #1 on: July 31, 2021, 02:01:24 AM »
I do not care what the chinks are doing as long as they become the next super power and dwarf the US.. Im happy.. :thumbsup:
I support no government anywhere, ever, never. No institution, No religion!!

Online Texan77

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Re: The New china.
« Reply #2 on: July 31, 2021, 01:09:47 PM »
I know I could count on you to say something total meaningless.

The Chinese have a problem. Their economy depends on construction at the present level. It does not seem possible that they construct at the current lever forever. On the other side people have been predicting this would end for years now but the Chinese keep on building and the prices keep going higher. 25 per cent of all the housing in China is empty though the flats has been sold. These empty flats are a way that Chinese people plan to retire is by selling these flats when they are old. They keep building more flats every year with the virus having led to an extra building boom and the public keep buying. The biggest increase in buying is in people buying a third flat while the people buying their first flat is declining. Rents are so low most of the flats are not even rented out.  When Retires begin selling their second and third flats how the market is going to be able to absorb them? The Chinese government has seen the problem and has made financing on second and third flats difficult and require a very large down payment. Still the flats are selling. These building where the flats are located are on rented land. The lease is for seventy years. Flats can only be finance during the first 15 years of the building being built. So if you buy a flat and fifteen years latter when you retired want to sell it you must sell it to a cash buyer only.

Recent changes the Chinese government has promised to start make housing more affordable to first time Chinese buyers. So I am sure some changes are about to occur. But if retirees lose money on flats it might kill the market for future retires from wanting to buy a second and third flat. The Chinese can not afford to stop have all this building. I am not sure what is going to happen here. I think this covers part of it.



Online Steveboy

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Re: The New china.
« Reply #3 on: July 31, 2021, 03:06:50 PM »
I know I could count on you to say something total meaningless.

The Chinese have a problem. Their economy depends on construction at the present level. It does not seem possible that they construct at the current lever forever. On the other side people have been predicting this would end for years now but the Chinese keep on building and the prices keep going higher. 25 per cent of all the housing in China is empty though the flats has been sold. These empty flats are a way that Chinese people plan to retire is by selling these flats when they are old. They keep building more flats every year with the virus having led to an extra building boom and the public keep buying. The biggest increase in buying is in people buying a third flat while the people buying their first flat is declining. Rents are so low most of the flats are not even rented out.  When Retires begin selling their second and third flats how the market is going to be able to absorb them? The Chinese government has seen the problem and has made financing on second and third flats difficult and require a very large down payment. Still the flats are selling. These building where the flats are located are on rented land. The lease is for seventy years. Flats can only be finance during the first 15 years of the building being built. So if you buy a flat and fifteen years latter when you retired want to sell it you must sell it to a cash buyer only.

Recent changes the Chinese government has promised to start make housing more affordable to first time Chinese buyers. So I am sure some changes are about to occur. But if retirees lose money on flats it might kill the market for future retires from wanting to buy a second and third flat. The Chinese can not afford to stop have all this building. I am not sure what is going to happen here. I think this covers part of it.



I know I could count on you to say something total meaningless. . That is my speciality.. :laugh:
I support no government anywhere, ever, never. No institution, No religion!!

Online Texan77

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Re: The New china.
« Reply #4 on: July 31, 2021, 06:23:00 PM »
Yea it helps to not know anything about anything real.

Up until 2008 the Chinese had a policy of not interfering in other countries but establishing business partners.  You can not say they changed over night but they did change very much. Most people here read RT news which have not kept readers abreast to the changes that have occurred in the Chinese attitude. Now it threaten countries all over the world, brides their governments to sell out the population, uses debt trap diplomacy, steal their natural resources to a point to make them the least popular government on earth. The Chinese no longer care if you like them or not because they are the only game in the world and you can trade with China or do without. You will end up buying from the Chinese company of your choice whether you like them or not. The video is about how Chinese have change and a little about some possible reasons why. 

 

Online andrewfi

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Re: The New china.
« Reply #5 on: August 01, 2021, 06:30:43 AM »
Funny place, China. Even funnier is Western media.

Those 'empty cities' - funny thing, but they tend to be pretty full after about 5 years or so. But the funny western journalists keep finding new empty cities.

It's a matter of scale. Those who are old enough will remember tract housing in the USA and similar in the UK.
Hundreds, perhaps thousands of homes built speculatively. Apart from very rare cases those developments went from empty to full. Whole new communities built in advance to serve millions of people able to afford to buy a modern home for the first time.

Same thing in China. Its not about population growth but a vast migration of people from countryside to city at the same time as a huge growth in personal wealth and living standards.

So, look back to Levittown and successor/peer developments in the USA to understand what is happening in China but consider the scale.
...everything ends always well; if it’s still bad, then it’s not the end!

Online Texan77

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Re: The New china.
« Reply #6 on: August 01, 2021, 09:18:12 PM »
The growth of people moving from the country side to the cities has slowed down. Many that are moving from the country side are even moving back. The new factory jobs are requiring skill labor as the unskilled workers are not so much in demand for any kind of wage that they will ever be able to afford housing. Most of the unskilled jobs in China are moving out of the country because there is cheaper unskilled labor else where. Wages in China has increased by a factor of 12 in the last twenty years. This is both good and bad depending how you want to look at it. It has brought many people out of poverty but is not making it not easy for new people to make the same transition.

The future of China is very complex in todays world. Not so much has ever happened in any other frame of time. Factories are getting robots and AI and needing less workers. The working age population is declining so maybe the work force will balance. The government is trying to boost the population and one of the elements is to make housing more affordable to the first time home buyers. How they are going to do this is still a question. Globalization is coming to an end. The USA and the EU will not be buying so many Chinese or any bodies products in the not too distant future.

China has a debt to GDP ratio twice that of the USA. The local states depend on the leasing of land sites to build new buildings for all their income.

The building new flats have increased in the last three years. They are having a real estate boom now and prices are soring. But it is foolish to draw a straight line and assume what happened in the past will continue forever in the future.  If you could do that investing would be easy and everyone would get rich.

We have had a number of real estate bust in the USA but we have never had an economy so dependent on real estate.

Online Texan77

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Re: The New china.
« Reply #7 on: August 08, 2021, 11:11:35 PM »
You will notice that home buyers who are buying their first home buyers as a percentage of buyers in China has declined from 75 per cent in 2010 to just 13 per cent in 2018. Showing the migration of people from the country side to the cities is no longer fueling housing sells like it did just a few years ago. 87 per cent of the home sales are to people who will own two homes or more after the completion of their current purchase. The rental market is very bad and nearly impossible to make any money renting out your unit. So these extra units are usually left vacant as a speculative investment. 


ila_rendered

Online andrewfi

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Re: The New china.
« Reply #8 on: August 09, 2021, 07:50:39 AM »
Texan77, nice try, but no biscuit for you. Rather than trying to make unsafe inferences from secondary data, why not look at what is actually happening and what is being planned for in China.

For ease I suggest you take a look here: https://en.wikipedia.org/wiki/Migration_in_China

The article refers to migrant workers - these are the engine of the move from (mostly) rural areas to urban areas. They remain migrants until they settle permanently, but settle they do. Even if not permanent settlers they require housing.

The concept of migrant workers as it applies in China is not what you likely associate with your experience - that's due to the Chinese system of Hukuo which ties people's access to social services to their place of birth. Meaning that a person who has lived in a new location for decades will still be considered a migrant, a person only temporarily in the urban area he and his family now live.

To save you the bother of reading, from the article:
in 2015 there were about 277.5 million migrant workers - about 1/3 of all employment. Estimates are that Chinese cities will face an influx of another 243 million migrants by 2025, taking the urban population up to nearly 1 billion people.

Think for a moment Texan77, if we divide 277 million by 10 years, the result is 28 million new people per year, between 2015 and 2025.
How many new cities does that suggest will be built?
How long does it take to build a city?

Now do you better grasp what is going on and the time scales?

Urbanisation in China: https://www.statista.com/statistics/270162/urbanization-in-china/

Texan77, the scale and numbers are unimaginable to most people - especially if you have never seen the situation - and I saw it many years ago and only for a brief time.

So, yes, homes, usually apartments, are being built and purchased speculatively, but it is not a bad bet. Those homes will fill up and, as I somewhat facetiously noted upthread - and to which you objected, after about 5 years. You see, development MUST be done ahead of time. Building according to the demand of the moment simply is not possible, so speculative purchase of apartments as investments form a kind of buffer.

Look at the proper numbers matey rather than making assumptions, or echoing the assumptions of others - it helps.

Worth noting that the Chinese government is now looking at ways to reduce the movement to the huge cities concentrated in the coastal regions. The next phase is likely to be developments in the western parts of the country and although English language articles talk about this being a return to keeping people in rural areas, it most certainly isn't. The commentators don't seem to have a grasp of the scale of the issue and what the policy discussions from the top mean in real terms.
...everything ends always well; if it’s still bad, then it’s not the end!

Online andrewfi

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Re: The New china.
« Reply #9 on: August 11, 2021, 05:53:22 AM »
Texan77, in my post above I mentioned that China was now looking at ways to improve rural areas such that the economic drivers behind migratory work might be reduced.

Here's an interesting article on the subject.
https://global.chinadaily.com.cn/a/202104/09/WS606f93bda31024ad0bab4570.html

Notice that this is not about keeping peasants working in rice paddies. It is, once again about urbanisation. Albeit in what are described as towns. Of course, in China a town is a pretty big place.

Again, look at the scale of the project. 1000 towns between 2017 and 2020. This is an inconceivable scale for most of us.
What's more though, this plan will have resulted from experiments and test cases to develop and refine the plan - because that's how its done in China, a hugely democratic bottom up process where feedback and opinion is gathered at grass roots level.
...everything ends always well; if it’s still bad, then it’s not the end!

Online Texan77

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Re: The New china.
« Reply #10 on: August 13, 2021, 08:49:38 AM »
These are not people moving to cities to buy housing. Migrates do not buy units. Yes like you data says there are 300 million migrates doing low end work moving to city to city.  But the word migrate does not mean they are moving from the country side to the city. Rural development does not move people from the country side to Cities. The Chinese government is aware of the problem and has pledge to put more first time buyers in housing.  I am not sure how they are going to do this.  When the USA tried this we had the 2008 housing collapse and bank failures.

We are getting ready for a large Real estate crash world wide. Young people in most western countries not able to buy housing that their parents were able to buy at the same age. Starter homes in many western cities are now 400,000 dollars. Do to an aging population in the not to distant future we will have more sellers than buyers. Those younger buyers will not be able to afford the housing prices at current levels. The only way around this I can see is if we have massage wage inflation where young people can afford the housing. That is also a problem of a different kind.

The Chinese government know it is in for a future problem and is taking measures to insure the safety of their banks in the case of a real estate bubble collapse. First time buyers need 20 per cent down on first flat, 50 per cent down to buy second flat and 75 per cent down on third flat.  If a flat is over 15 year old it can not be financed.  Now they are building new housing that can be financed in cities ghost cities along side the old buildings where buyers can not get financing on the existing housing. It makes it hard if you own one of those empty flats.

In none of this have you shown any data that Chinese first time home buyers are buying enough housing to ever fill the over production of housing. It is true the Chinses government is said it was going to work on the problem of first time flat buyers. Hopefully they do better than the USA did when we tried to solved the problem.


 

 

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